For this week's trade, buying $XLI January 130 calls for 35 cents or cheaper.

Get the full details, risk management procedures and targets for this trade here:

From the desk of Willie Delwiche.

Key Takeaway: That investors are in a dour mood is not in doubt. We just saw the fewest bulls on the AAII survey since 1992 and the University of Michigan Consumer Sentiment Index is about as low as it has ever been. This week has brought news that US equity ETF’s have had outflows in three of the past four weeks. If this is just a pause in what some have called the persistent bid fueled by a move toward index investing, then this too is a bullish development. If, on the other hand, it represents the early stages of passive equity investors becoming disgruntled and looking for other options, then consider it a meaningful increase in equity market risk. Time will tell, but price and breadth improvements would help assuage these concerns. Either way, pessimism is a condition that needs a catalyst to spark a rally. It’s a pile of firewood, but for now it remains unlit. 

Sentiment Report Chart of the Week: Conditions Need Catalysts

A pile of wood does not alone make a campfire. You...

Investor sentiment is bad. Historically bad.

Don't take my word for it. Check it out for yourself.

Sentiment has only been this bearish four times over the last 40 years: Coming out of rampant 1970's inflation, the Savings & Loan crisis of the early 90's, the Great Financial Crisis of 2008-09, and the "Fiscal Cliff" circa 2012.

Do you remember those times?

And you see what happened in the S&P 500 after, right?

Is history going to repeat itself? And if so, how do we protect ourselves and our portfolios from the "risk" of being underinvested if that happens?

In a tape as messy is this, it pays to be patient and only focus on A+ setups.

The names emerging from bases on solid volume are the ones you want to lean on. By slinging names in messy ranges, you'd only be asking to get whipsawed.

We can't help but notice the relative strength coming out from ApeCoin $APE and STEPN $GMT, which we mentioned a few days back.

Both have real nice shapes emerging from their post-ICO bases:

Looking tactically, they both offer us some decent risk-versus-reward for a speculative bet.

The only insider buy on today's Hot List is a Form 4 filing by the CEO of Solo Brands $DTC, who reported a purchase of roughly $486,200.

In the options market, there was bullish options activity in the social media platform Pinterest Inc $PINS and in the retail pharmacy operator Walgreens Boots Alliance Inc.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

The US Dollar Index $DXY resumes its relentless march higher.

But the full story surrounding the dollar’s dominance is a bit more complicated.

Lately, we’ve been pounding the table about the narrow scope of the DXY, as 83% of its weightings come from just three currencies – the yen, the pound, and the euro.

All three continue to lose ground versus the dollar, and this is exactly what's driving the rally at the index level.

On the other hand, the USD has not performed as well against other currencies – especially emerging markets and commodity-centric ones. 

While this remains the case, we’re starting to see USD strength expand beyond the major components of the DXY. We're also seeing some nice long-term patterns materialize that favor the US dollar.

A great example is the rounding bottom in the US dollar-Korean won cross – USD/KRW.

Here’s a zoomed...

From the desk of Willie Delwiche.

Participating in strength so far in 2022 provides us with some operational flexibility in our Dynamic Portfolios. But in a market with relatively narrow participation, it can be challenging to find ways to move from strength to strength without becoming too concentrated. That said, we are reducing exposure to some of the strongest areas of the market - taking gains more than expecting weakness. We are finding opportunities to maintain our current exposure to the market, increase our diversification and remain consistent with the message of caution coming from our risk indicators and the weight of the evidence. This remains an environment that favors a dynamic over passive approach and one in which being tactical and cyclical enhance strategic exposure.

There are times when you need to trade like a pig. With these macro conditions, now is not that time.

In those roaring crypto bull markets we've all come to know, bravery is more important than brains. But, in periods like these, traders who are patient get rewarded.

When the market inevitably improves, you can get back to making money instead of picking up pennies to recover from big drawdowns by avoiding the mental hurdle of overtrading.

As we've said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.

There's that old adage that there are only three short periods each year to make money. Or consider the classic Paul Tudor Jones quote that “markets trend only about 15 percent of the time; the rest of the time they move sideways.”

We can't reiterate this enough; there's a huge difference between looking for a setup and seeing one.

If you go into the market with preconceived notions about how things should be instead of seeing them for how they really are, you might as well go take a punt on the dish lickers.

Follow the money flow....

Today’s Hot List is a short one.

Durable Capital Partners continues to build its position in the language-learning website and mobile app Duolingo Inc $DUOL.

This is the video recording of the April 2022 Mid-month Conference Call.

We discussed:

• The Major U.S. Indexes and Current Technical Analysis
• Commodities making multi-year highs vs Stocks
• Our Sentiment Composite Indicator shows excess Pessimism
• Value Stocks continue to lead vs Growth Stocks
• Energy Stocks and Commodities Trades
• Agriculture Stocks and Commodities
• Base Metals & Precious Metals
• The US Dollar vs US Dollar Index are very different
• Global Markets: Pockets of Strength & Weakness
• Bonds Yields and Yield Curves
• What To Do With These Beat Up Growth Stocks
• Bitcoin Correlations & New Crypto Trade Ideas

We alluded to the strong move that we're observing in the Fertilizers and Chemicals space. Today we're here to take a look at one such stock that just broke out above its resistance and looks good to go!

Read on to know more.